Correlation Between DCC PLC and Sunoco LP
Can any of the company-specific risk be diversified away by investing in both DCC PLC and Sunoco LP at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining DCC PLC and Sunoco LP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DCC PLC ADR and Sunoco LP, you can compare the effects of market volatilities on DCC PLC and Sunoco LP and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in DCC PLC with a short position of Sunoco LP. Check out your portfolio center. Please also check ongoing floating volatility patterns of DCC PLC and Sunoco LP.
Diversification Opportunities for DCC PLC and Sunoco LP
Poor diversification
The 3 months correlation between DCC and Sunoco is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding DCC PLC ADR and Sunoco LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunoco LP and DCC PLC is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on DCC PLC ADR are associated (or correlated) with Sunoco LP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunoco LP has no effect on the direction of DCC PLC i.e., DCC PLC and Sunoco LP go up and down completely randomly.
Pair Corralation between DCC PLC and Sunoco LP
Assuming the 90 days horizon DCC PLC is expected to generate 5.51 times less return on investment than Sunoco LP. But when comparing it to its historical volatility, DCC PLC ADR is 8.19 times less risky than Sunoco LP. It trades about 0.09 of its potential returns per unit of risk. Sunoco LP is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5,179 in Sunoco LP on September 5, 2024 and sell it today you would earn a total of 503.00 from holding Sunoco LP or generate 9.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DCC PLC ADR vs. Sunoco LP
Performance |
| Timeline |
| DCC PLC ADR |
| Sunoco LP |
DCC PLC and Sunoco LP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DCC PLC and Sunoco LP
The main advantage of trading using opposite DCC PLC and Sunoco LP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DCC PLC position performs unexpectedly, Sunoco LP can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Sunoco LP will offset losses from the drop in Sunoco LP's long position.| DCC PLC vs. Ultrapar Participacoes SA | DCC PLC vs. Sunoco LP | DCC PLC vs. HF Sinclair Corp | DCC PLC vs. Delek Energy |
| Sunoco LP vs. CVR Energy | Sunoco LP vs. PBF Energy | Sunoco LP vs. HF Sinclair Corp | Sunoco LP vs. Par Pacific Holdings |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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